Interest rate cut to support market

More interest rates in 2008 will help the housing market bounce back, the Royal Institution of Chartered Surveyors (Rics) has said.

The organisation said the Bank''s prospects for further lowering of the base rate had increased due to the "doveish" tone of the minutes of the monetary policy committee meeting earlier this month.

Responding to news from the Council of Mortgage Lenders that the total amount of gross lending in the UK had dropped by eight per cent from £33.5 billion in October to £30.7 billion in November, Rics said the cut was a necessary as well as likely move.

Chief Rics economist Simon Rubinsohn predicted rates to fall by at least 0.5 per cent in 2008, adding this would "support" the market by helping to "offset the threat posed by the increase in mortgage outlays as the resets for up to 1.4 million homeowners fall due."

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